Survival strategies

If your top management wants to dump your IT shop, there's probably not much you can do about it.

          Will your IT shop survive these budget-slashing, outsource-everything days?

          Or to put it another way: Will your company survive? My fellow Computerworld US columnist Paul A. Strassmann provided one answer to both those questions: Companies that outsource their IT wholesale usually do it because they're already in financial trouble and things get worse, not better, after IT is gone.

          What Strassmann didn't say is this: If your top management wants to dump your IT shop, there's probably not much you can do about it.

          Strassmann is a hard-numbers guy. He comes to his conclusions by crunching lots of real data from lots of real companies, not by blue-skying about an ideal world. And he's been tracking outsourcing numbers since 1995, so there has been plenty of time for successful wholesale outsourcing deals to make a liar of him.

          They haven't. What proved true in 1995's growing economy is still true in 2002's recession: Outsourcing certain IT functions may work if it's done with a hard eye toward measurable financial improvements. But farming out all of IT isn't healthy for a business and healthy businesses don't do it.

          This all makes sense if you think IT has real value in making an organisation successful. Completely outsourced IT can't provide competitive advantage. It can't move quickly to adjust to changing business conditions. It doesn't know the business it's supposed to serve because it's not part of that business. Internal IT can do all of those things. It's a critical strategic asset. So cutting it out cripples a business' ability to compete.

          But executives who want to outsource everything don't believe that. They don't see IT as a strategic asset. They just want to get all those warm bodies off the books.

          And, very likely, there's no argument you can make to change their minds. Demonstrating return on investment for IT projects won't do it, because outsourcing-happy executives don't view IT as an investment, but as a cost.

          Showing that a loss of flexibility and in-depth knowledge of the business will cost more than it will save won't make them change their minds either, because they don't see IT as a strategic advantage, but as an operational expense.

          Pointing out that wholesale outsourcing means IT will be optimised to serve the interests of the outsourcer, not your business, won't do it because, hey, it worked when they got the janitors off the payroll and how different is keeping hallways clean from keeping networks running, anyhow?

          Ugly? Sure, that's ugly. But it does remove the ambiguity and uncertainty for people in an IT shop that faces wholesale outsourcing.

          It means your IT shop will go away. But then, down the line, so will the whole business.

          So you're wasting your time making a business case for internal IT to outsourcing-happy management. Or calculating ROI. Or giving examples of cases where your IT shop saved the day when outsourced IT wouldn't have. You're better off spending that time polishing your résumé and your interview skills.

          And even in the unlikely event that you win a reprieve, things will just keep going downhill.

          Make no mistake, though: Not all companies looking at outsourcing are considering wholesale outsourcing. Surgical staff cuts and tightly targeted outsourcing are unpleasant, but they may deliver ROI or special capabilities that your IT shop can't produce today. There's no reason to bail out just because some outsourcing is on the table.

          But if your top management believes IT all of IT is dispensable, you don't need to ask whether your company will survive.

          You just need an exit strategy.

          Frank Hayes, Computerworld US' senior news columnist, has covered IT for more than 20 years.

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